A new report by AICPA & CIMA, together as the Association of International Certified Professional Accountants, says that tax uncertainty in the UK is making investments harder to plan and acting as a brake on productivity growth.
“High corporation taxes and income taxes can act as a barrier to investment and attracting and maintaining talent, depending on what tax incentives and social security policies accompany these taxes,” the Tax and Productivity Report said.
The report examines the link between taxation, productivity, and wider economic growth in contrast with other developed countries. It found that the UK has one of the least certain tax environments, the report said, changing income, value-added tax (VAT), and corporation tax rates more often and, in some cases, by larger percentages than the other countries studied.
The other countries in the report were Australia, Denmark, Finland, Ireland, Norway, Singapore, and Sweden.
Countries with stronger, longer-term productivity growth than the UK appear to have more stable taxation environments, according to a news release about the report.
Andrew Harding, FCMA, CGMA, Chief Executive – Management Accounting at AICPA & CIMA, explains that the poor rate of productivity growth is the most important economic issue facing the UK today and that a lack of tax certainty is contributing to the problem.
“Corporation tax is set at an uncompetitive rate, while workers are being deterred from moving to locations where their skills are needed by high levels of and complicated stamp duty,” he said. “The burden of tax and constant tinkering, coupled with the global political-economic situation, do little to grow confidence and drive investment in the UK. I hope the Chancellor’s Autumn Statement will include measures to address these issues.”
— To comment on this article or to suggest an idea for another article, contact Steph Brown at Stephanie.Brown@aicpa-cima.com.